The market, however, expects dollar demand to increase on higher seasonal imports and a pick-up in the purchase of motor vehicles after taxes were slashed in the national budget earlier this month, they said.

The spot rupee, which hit a low of 153.80, closed at 153.70/75 per dollar, compared with Tuesday's close of 153.75/80.

"Forward premiums were attractive and exporters booked them and it helped the rupee to gain slightly," a currency dealer said, asking not to be named.

"There was importer dollar demand, but large import bills like petroleum were not there."

Though the rupee is under pressure, it may not fall as much as the market previously expected, dealers said.

The market had expected a 4 percent fall in the currency for 2017, but the currency has slipped 2.7 percent so far in the year.

The market expects the currency to face pressure, with imports of more low-end vehicles on which the government has already reduced taxes.

The government imposed new taxes on high-end motor vehicles, telecoms, banks and liquor in a bid to boost revenues in its 2018 budget outlined on Nov. 9, as the budget deficit for the current year slipped to 5.2 percent of the GDP.

Foreign investors were net buyers of equities worth 19.7 billion rupees ($128.17 million) this year as of Wednesday's close. They were net buyers of government securities worth 45.7 billion rupees as of Nov. 15, official data showed.